Billion-dollar disasters nearly tripled in WA over 20 years

Natural disasters causing at least $1 billion in damage nearly tripled in Washington state over the last 20 years, due primarily to wildfires and droughts, according to recent data.

Why it matters: In addition to threatening homes and property, disasters are causing insurers to change how they factor climate and extreme weather risks into premiums.

• The number of homes at risk for wildfire damage in Washington is expected to grow almost 30 percent by 2053, according to another report released last month.

Zoom in: An estimated 8% of properties in Washington could face higher insurance premiums or policy non-renewals due to the risk of wildfires, high winds or flooding, Axios' Brianna Crane and Kavya Beheraj report.

• Already, the average Washington homeowner insurance premium has risen 5% from $924 in 2022 to $969 in 2023, Divya Sangameshwar, an insurance expert for LendingTree, told Axios.

What they're saying: Natural disasters are leading to an increase in the number and severity of insurance claims, Insurance Commissioner Mike Kreidler told Axios.

• "The connection between climate change and insurance risk is playing out in the severity of claims and how much people pay for coverage," he said. "Unfortunately, these issues are not going away."

Details: Among 33 billion-dollar natural disasters in the state, eight occurred between 1984 and 2003, according to data analyzed by insurance comparison business QuoteWizard.

• Since 2004, the state has logged nine droughts, 11 wildfires, two severe winter storms and one severe storm, per the analysis.
• While the state Department of Natural Resources does not track the cost of wildfires to insurers, department spokesperson Joe Smillie says the number of large wildfires and the cost of fighting them has increased steadily.
• DNR spent $174 million in firefighting costs last year and has gone from seeing tens of thousands of acres burned per year to hundreds of thousands since 2004, Smillie told Axios.

The big picture: Nationally, there has been a 157% increase in billion-dollar natural disasters, with 38 states experiencing a 100% or more increase since 2004, Sangameshwar said.

• The cost of these disasters in the U.S. totaled $165 billion last year, per NOAA, and $57.6 billion in the first eight months of 2023.

Between the lines: Studies show that climate change is leading to larger, more frequent wildfires and worsening droughts, writes Axios' Andrew Freedman.

What we're watching: Insured losses from catastrophes are rising at a long-term rate of between 5% and 7% per year, insurer Swiss Re noted in August, writes Axios' Rebecca Falconer.

• Overall losses from severe weather in the first half of this year came to more than $35 billion, of which over $25 billion was insured, according to that report.
• Insurers have started taking drastic steps to reduce their losses, including not writing policies for homes in high-risk areas or raising premiums and deductibles to the point of being unaffordable, said Sangameshwar.